End of US Economic Dominance

[maverick44]

Latest article in newsweek.

Link:http://www.newsweek.com/id/105563/page/2

Major points:

1) Asian economies will probably continue to surge despite the slowdown in America
2) Declining US share of the global GDP
3) Declining dollar
4) All of this actually might be good news. Overseas investment might cushion a possible recession. Cheap dollar makes US exports more viable. Trade deficit declined by 100 billion last year.


Quotes:

Consider how different the current crisis is from the panics of the 1990s. The U.S. economy may have been in a stronger position back then, but the real difference is the condition of the rest of the world. In the mid-1990s, Russia was on its knees, begging the West for aid. Today it's growing at 7 percent a year and setting up its own sovereign wealth fund. In the past, East Asian countries were at the mercy of the IMF and other Western institutions. Now they post huge surpluses. In fact, more than three quarters of the world's foreign-exchange reserves are now held by emerging-market countries. Wealth and success breed pride and confidence.

But do the present batch of presidential candidates recognize this reality, the Author doesnt think so.

On the American campaign trail, the candidates talk about a world utterly unrelated to the one that is actually being created on the ground. The Republicans promise to wage war against Islamic extremists and modernize the Middle East. The Democrats deplore the ills of globalization and free trade, and urge tougher measures against China. Meanwhile Middle Eastern fund managers and Asian consumers are quietly keeping the U.S. economy afloat

Questions comments welcome

 

[blackangst1]

It's Asia's time is all. Nothing wrong with it. I find it amusing the group who is crying the death of America...our reign is over,...etc. It certainly isnt. OK, so the dollar is declining. It isnt permanent lol. and people also dont understand with the dollar declining, it increases US exports, which is a good thing for us.

Asia is doing well. The middle east (Dubai especially) is doing well. Northern Africa is doing well (mainly from Dubai's help)...good for them. It WILL create opportunity for multi-nationional companies who are based and traded on Wall Street.

 

[Rainsford]

Originally posted by: blackangst1
It's Asia's time is all. Nothing wrong with it. I find it amusing the group who is crying the death of America...our reign is over,...etc. It certainly isnt. OK, so the dollar is declining. It isnt permanent lol. and people also dont understand with the dollar declining, it increases US exports, which is a good thing for us.

Asia is doing well. The middle east (Dubai especially) is doing well. Northern Africa is doing well (mainly from Dubai's help)...good for them. It WILL create opportunity for multi-nationional companies who are based and traded on Wall Street.

Indeed. Part of the problem is that many people seem to view economics as a zero sum game, that the only way to "win" is to beat everyone else. That's not particularly true, the rise of the Asian economy doesn't require taking wealth from the United States...it's actual new growth that will help everyone. Emerging economies in Asia also mean emerging markets for US products, and that's just one example.

And from a global point of view, "multipolar" economic power is good. While I have no doubt that the US will remain one of the poles of the world economy for a long time, it's better for overall stability if we aren't the only thing propping up the entire house of cards.

 

[maverick44]

Originally posted by: Rainsford

Originally posted by: blackangst1
It's Asia's time is all. Nothing wrong with it. I find it amusing the group who is crying the death of America...our reign is over,...etc. It certainly isnt. OK, so the dollar is declining. It isnt permanent lol. and people also dont understand with the dollar declining, it increases US exports, which is a good thing for us.

Asia is doing well. The middle east (Dubai especially) is doing well. Northern Africa is doing well (mainly from Dubai's help)...good for them. It WILL create opportunity for multi-nationional companies who are based and traded on Wall Street.

Indeed. Part of the problem is that many people seem to view economics as a zero sum game, that the only way to "win" is to beat everyone else. That's not particularly true, the rise of the Asian economy doesn't require taking wealth from the United States...it's actual new growth that will help everyone. Emerging economies in Asia also mean emerging markets for US products, and that's just one example.

And from a global point of view, "multipolar" economic power is good. While I have no doubt that the US will remain one of the poles of the world economy for a long time, it's better for overall stability if we aren't the only thing propping up the entire house of cards.

Yes, but does anyone in Washington recognize this. If the world is going to be multipolar economically, why not let it be multipolar politically and diplomatically.

Why spend more than the entire world on defense? Why have bases all around the world? Part of the reason the Asian economies are doing so well is that they spend so little on defense and hence and always have surplus funds to divert towards education and infrastructure.

 

[ProfJohn]

We still have the largest economy in the world so in that sense we still ?dominate.?

Eventually China will pass us, but until their per capita GDP approaches ours the fact that their economy is bigger won?t matter much. A billion people making $5000 a year doesn?t have as much impact on the world as 300 million people making $40,000 a year.

If the US economy goes into a recession and the rest of the world doesn?t follow that would actually be a good thing. It would mark a change from the past where the rest of the world would follow us when that happened. Plus strong economies in Asia would help to pull us out of a recession.

However, the fact that we are still the largest import market in the world makes me believe that if we go into a bad recession the rest of the world will feel the impact some place down the road. It?s a domino effect. We import less toys from China so their economy slows down which causes their trading partner?s economies to slow down etc.

 

[ProfJohn]

Originally posted by: maverick44
Yes, but does anyone in Washington recognize this. If the world is going to be multipolar economically, why not let it be multipolar politically and diplomatically.

Why spend more than the entire world on defense? Why have bases all around the world? Part of the reason the Asian economies are doing so well is that they spend so little on defense and hence and always have surplus funds to divert towards education and infrastructure.

They can do that because we are there to pick up the slack.

Look at Kuwait... if the US wasn't there to bail them out no one else it world would have been able too. Look at Japan, India and China and their reliance on Middle East oil. They depend on us to keep that oil flowing freely out of the gulf into their countries. If we drastically cut back on our defense spending rogue countries like Iran would be able to interfere with the flow of oil and no one else would be there to stop them.

Think of it this way? you live in a little town west of Atlanta. You know that having a fire department is very expensive. Then you realize that Atlanta has hundreds of fire trucks so you decide to cut funding to your fire department and rely on Atlanta to help you if there is ever a major fire. Then all the other little towns around Atlanta decide to do the same thing. Then a bunch of people in Atlanta complain that they are spending too much money on fire protection compared to the towns around them so they demand that Atlanta cut their fire budgets too. Then an arsonist moves into town and starts setting things on fire and everyone is screwed.

 

[EagleKeeper]

Originally posted by: maverick44

Originally posted by: Rainsford

Originally posted by: blackangst1
It's Asia's time is all. Nothing wrong with it. I find it amusing the group who is crying the death of America...our reign is over,...etc. It certainly isnt. OK, so the dollar is declining. It isnt permanent lol. and people also dont understand with the dollar declining, it increases US exports, which is a good thing for us.

Asia is doing well. The middle east (Dubai especially) is doing well. Northern Africa is doing well (mainly from Dubai's help)...good for them. It WILL create opportunity for multi-nationional companies who are based and traded on Wall Street.

Indeed. Part of the problem is that many people seem to view economics as a zero sum game, that the only way to "win" is to beat everyone else. That's not particularly true, the rise of the Asian economy doesn't require taking wealth from the United States...it's actual new growth that will help everyone. Emerging economies in Asia also mean emerging markets for US products, and that's just one example.

And from a global point of view, "multipolar" economic power is good. While I have no doubt that the US will remain one of the poles of the world economy for a long time, it's better for overall stability if we aren't the only thing propping up the entire house of cards.

Yes, but does anyone in Washington recognize this. If the world is going to be multipolar economically, why not let it be multipolar politically and diplomatically.

Why spend more than the entire world on defense? Why have bases all around the world? Part of the reason the Asian economies are doing so well is that they spend so little on defense and hence and always have surplus funds to divert towards education and infrastructure.

Many of the growing Asian economies and also others for the past 50+ years have relied on the big boys on the block to protect them from poachers by acting as their defensive shield.

If the US will put in a base with 10K people, that is a base with 10K people that they do not have to support. Plus they then get the benefit of the economic shot of the 10K people.

 

[StageLeft]

The US spends too much on military. As a proportion of GDP, the numbers are not staggering (I believe north korea drops something like 20-30% of their GDP on it, haha), but if the economy does falter long term, the military will HAVE to be trimmed. That's part of what killed russia, part of what kills north korea. It will have to go.

 

[maverick44]

Originally posted by: ProfJohn

Originally posted by: maverick44
Yes, but does anyone in Washington recognize this. If the world is going to be multipolar economically, why not let it be multipolar politically and diplomatically.

Why spend more than the entire world on defense? Why have bases all around the world? Part of the reason the Asian economies are doing so well is that they spend so little on defense and hence and always have surplus funds to divert towards education and infrastructure.

They can do that because we are there to pick up the slack.

Look at Kuwait... if the US wasn't there to bail them out no one else it world would have been able too. Look at Japan, India and China and their reliance on Middle East oil. They depend on us to keep that oil flowing freely out of the gulf into their countries. If we drastically cut back on our defense spending rogue countries like Iran would be able to interfere with the flow of oil and no one else would be there to stop them.

LAAWWWLL!!!! Are you implying that Japan, India and China are helpless against IRAN??? A division of either japanese, chinese or indian forces would wipe away anything that Iran has to offer which is 20 years behind anything close to resembling a modern military.


Its good that you brought up kuwait. Most of the world was pissed with Iraq in 1991. Most of the funding for the war came from europe ( main benificiaries of kuwaiti oil). A sizeable part of the allied force came from europe. I dont think that allied force would have missed a few squadrons less of american air power. In any case, the world is different in 2008 than in 1991.

Think of it this way? you live in a little town west of Atlanta. You know that having a fire department is very expensive. Then you realize that Atlanta has hundreds of fire trucks so you decide to cut funding to your fire department and rely on Atlanta to help you if there is ever a major fire. Then all the other little towns around Atlanta decide to do the same thing. Then a bunch of people in Atlanta complain that they are spending too much money on fire protection compared to the towns around them so they demand that Atlanta cut their fire budgets too. Then an arsonist moves into town and starts setting things on fire and everyone is screwed.

Flawed analogy.. this is implying the rest of the world spends nothing on defense. Truth is Russia, India , China, South Korea, Europe etc have sizable forces to protect their immediate needs. Its just that they dont seek to meet the power projection scenarios that the US has been planning for since the cold war. And that power projection capability landed us in Iraq. Great move.

Face it, most of the overseas bases were setup immediately after WW2 and during the height of the cold war to act as counter weights to communist expansion. It was a questionable strategy then, and right now it doesnt make any sense. I mean can some one explain the logic of having an airbase in Rammstein, Germany in 2008 .From whom are we protecting the Germans right now.......... the Republic of Poland?????

As a proportion of GDP, the numbers are not staggering (I believe north korea drops something like 20-30% of their GDP on it, haha),

This brings me to another point. The US due to the size of its economy can afford to spend less than these countries as a proportion of its GDP. eg a 300 billion dollar economy can see a good chunk of its GDP vanish if it tries to maintain a decent modern airfoce (planes cost 50-60 mil a peice these days). Funny it chooses to go the North Korean way.


The repubs keep complaining about pork in education and welfare programs. The only pork I see is in defence programs. Billions spent on stupid far fetched programs such as a missile shield and 4 more aircraft carriers ( as if 11 weren't enough already)

 

[piasabird]

US just needs to quit bailing out people and solving their problems unless they are paying for the service.

I have thought for a long time that we need to pull out of Europe and places like Japan and Korea. Let them solve their own problems. Why do we have troops in Spain? Why are we protecting Germany? Why does Italy need protection? If the EU is so full of themselves let them do their own security. We dont need to be the nanny state for the entire globe.

I say bring it on and let Africa just starve to death.

 

[Jaskalas]

Originally posted by: piasabird
US just needs to quit bailing out people and solving their problems unless they are paying for the service.

I have thought for a long time that we need to pull out of Europe and places like Japan and Korea. Let them solve their own problems. Why do we have troops in Spain? Why are we protecting Germany? Why does Italy need protection? If the EU is so full of themselves let them do their own security. We dont need to be the nanny state for the entire globe.

I say bring it on and let Africa just starve to death.

I?m all for closing down the majority of our foreign bases.

 

[Fern]

Are we drifting towards a multipolar world?

I see it in a very different way.

IMO, businesses are no longer US, or Asian or whatever.

They no longer have nationalites. They've become international. Government can't kill 'em. They just move elsewhere where the environment is more friendly.

Fern

 

[desy]

Yep
Multinationals are like Robocop where gov'ts are diminished.

I've always expected the world to catch up to NA/ Europe and level the economies.
US GDP at the end of WW2 was 50% of the worlds GDP, now its 30%

 

[ElFenix]

Originally posted by: desy
Yep
Multinationals are like Robocop where gov'ts are diminished.

I've always expected the world to catch up to NA/ Europe and level the economies.
US GDP at the end of WW2 was 50% of the worlds GDP, now its 30%

it helped that we didn't have the shit bombed out of all of our factories.


it's the same reason we don't have high speed rail here: our network is probably the oldest in use, and twisty rails aren't conducive to high speeds. france, germany, japan, and korea had to rebuild their networks in the 40s and 50s, and so have higher speed rail than we do. but look elsewhere and rail basically is stuck in the same low gear as it is here, if not slower. we'll probably need high speed rail sooner rather than later, if only for the fact that you can only cram so many airplanes into takeoff and landing queues, but it sure is easier to do if you have to rip all your stuff out anyway cuz it's been bombed to hell.